The IADC North Sea Chapter would like to share its perspective on last month's UK Budget, and its impact upon the UKCS’ drilling companies - our Primary Members - and the associated supply chain, our Associate Members.
In short, the UK Government has reaffirmed its manifesto commitment to bring about the end of domestic oil and gas production, framing it as a “managed decline.” While industry - including the IADC - has lobbied for eased taxation and support for future developments, carbon and climate considerations have prevailed. Unfortunately, this outcome is consistent with expectations but regardless, the question on everyone’s mind is: what comes next?
We can expect lower near-term E&P spend, leading to fewer greenfield projects and reduced demand for rigs. Operators will also face pressure, making conversations around rates, project scopes, and timelines increasingly challenging. Consolidation is likely, with companies rationalising operations through mergers, asset sales, or contractor restructuring and we have to be prepared for that.
That said, opportunities do still exist. The question is – are they sufficient? We would argue that they do not come close. Yes, the UK Government’s North Sea Future Plan introduces measures such as enhanced enforcement powers for the NSTA in decommissioning and limited licensing through Transitional Energy Certificates for tie-back projects linked to existing fields. However, these concessions are modest and are certainly insufficient to offset the impact of an effective 78% tax rate under the EPL, which remains in place until 2030.
Concerns over the UK’s energy security are also pressing. Domestic oil and gas production has fallen by 40% over the past five years, and 2025 marked the first year in 50 without new exploration wells. Production is on course to halve again by 2030, forcing the UK to import energy at higher cost and often with lower environmental standards, thus adding pressure on inflation and emissions targets. The irony of this situation is difficult to ignore.
Decommissioning, tie-backs, and plug-and-abandonment work are increasingly in focus and could create new avenues for engagement. However, timelines remain unclear, and clarity will only come from operators and Government. We will continue to liaise with both on our members’ behalf.
It is also important to recognise that project financing is shifting. Private capital and joint-venture models are expected to play a larger role in bringing projects to fruition. While the landscape is evolving, this moment also presents an opportunity for the industry to adapt, rethink approaches, and position itself strategically for the future. Again, we are ready to support our members in this respect, as the landscape evolves.
It is a fact that “no man is an island”. Substitute “man” for “rig” and the statement loses none of its impact. The ramifications of a drastically reduced drilling industry are felt way beyond the rig itself - from the technical and service supply chain to the communities in the offshore energy workforce is based.
IADC North Sea Chapter represents the drilling industry and it supply chain at all levels and feels keenly a duty to do all we can to mitigate these circumstances.
We remain committed to supporting our members, advising on market trends, regulatory engagement, innovation, diversification and how they can contribute to a sustainable energy transition, with jobs and energy security at the very top of the agenda.